SouthGobi Resources Announces Select First Quarter 2014 Operating Results

SouthGobi Resources Ltd. (TSX:SGQ)(HKSE:1878) (the "Company" or "SouthGobi")
today announced select first quarter 2014 operating results. All figures are in
U.S. Dollars unless otherwise stated.


Select Operating Results

The Company's select operating results for the three months ended March 31,
2014, including comparative periods, are summarized in the table below:




                                                 ---------------------------
                                                      Three months ended    
                                                 ---------------------------
                                                    31-Mar   31-Dec   31-Mar
                                                      2014     2013     2013
----------------------------------------------------------------------------
Raw coal production (millions of tonnes)              0.64     1.73     0.02
                                                                            
Sales volumes (millions of tonnes)                                          
  Premium semi-soft coking coal                          -     0.21     0.08
  Standard semi-soft coking coal                      0.29     1.40        -
  Thermal coal                                        0.10     0.11     0.20
  Total                                               0.39     1.72     0.28
----------------------------------------------------------------------------



Consistent with the coal sales and production guidance provided in January 2014,
coal sales and production decreased in the first quarter of 2014 compared to the
fourth quarter of 2013. Sales volume is generally lower in the first quarter of
each year due to the seasonal holidays of Mongolian Tsagaan Sar and Chinese New
Year, which result in border closures at the Shivee Khuren-Ceke crossing at the
Mongolia-China border ("Shivee Khuren Border Crossing") and a general decrease
in the level of economic activity at the Shivee Khuren Border Crossing.


The Company resumed operations at the Ovoot Tolgoi coal mine on March 22, 2013
after having been fully curtailed since the end of the second quarter of 2012.
This resulted in higher coal production in the first quarter of 2014 compared to
the first quarter of 2013.


Other Information

Mongolian Royalty Regime

The Company is subject to a base royalty in Mongolia of 5% on all export coal
sales. In addition, effective January 1, 2011, the Company is subject to an
additional sliding scale royalty of up to 5%. For the last three quarters of
2013 and the first quarter of 2014, the royalty was calculated using a set
reference price per tonne published by the Government of Mongolia.


The Government of Mongolia changed the royalty regime effective April 1, 2014.
Under the new "flexible tariff" royalty regime, the royalty per tonne for export
coal sales will be calculated based on the actual contracted sales price per
tonne, whereby the contracted sales price includes the costs of transporting the
coal to the Mongolia-China border. If transportation costs are not included in
the contracted sales price between a buyer and seller, the following costs are
required to be included in the contracted sales price for purposes of
calculating the royalty per tonne: transportation costs and costs associated
with transportation such as customs documentation fees, insurance, loading and
unloading costs. In the event the actual contracted sales price calculated as
described above differs by more than 10% from the contracted sales price of coal
products with the same classification and quality being exported by other legal
entities in Mongolia through the same border crossing, the calculated contracted
sales price shall be deemed non-market under Mongolian tax law and the royalty
per tonne will be calculated from a reference price.


The Company currently sells coal from the Ovoot Tolgoi coal mine at the
mine-gate and the coal is exported through the Shivee Khuren Border Crossing.
The Company expects that its royalty per tonne calculated under the new
"flexible tariff" royalty regime will decrease compared to the prior reference
price royalty regime.


Cash Position and Liquidity

The Company's cash position and liquidity as at March 31, 2014, including
comparative periods, is summarized in the table below. Amounts are presented in
millions of U.S. Dollars.




                                    ----------------------------------------
                                                      As at                 
                                    ----------------------------------------
                                        31-Mar    31-Dec    30-Sep    31-Mar
                                          2014      2013      2013      2013
----------------------------------------------------------------------------
Cash                                  $    9.9  $   21.8  $   16.1  $   24.8
----------------------------------------------------------------------------



The changes in the Company's cash position in certain periods noted above are
inclusive of cash interest paid on the China Investment Corporation ("CIC")
convertible debenture in the amount of $8.1 million in the fourth quarter of
2013, $4.1 million in the third quarter of 2013 and $4.0 million in the first
quarter of 2013. The next cash interest payment on the CIC convertible is $7.9
million and is due on May 19, 2014.


As at April 21, 2014, the Company had cash of $15.8 million. Included in the
$15.8 million cash balance is an $8.0 million customer prepayment for future
coal deliveries.


The Company continues to minimize uncommitted capital expenditures, exploration
and operational expenditures in order to preserve its financial resources.


Outlook

Coal production in the second quarter of 2014 will be paced to meet contracted
sales volumes.


The Company anticipates that coal prices in China will remain under pressure in
2014, which will continue to impact the Company's margins and liquidity. Based
on its forecasts for the year ended December 31, 2014, the Company is unlikely
to have sufficient capital resources and does not expect to generate sufficient
cash flows from mining operations in order to satisfy its ongoing obligations
and future contractual commitments, including cash interest payments due on the
CIC convertible debenture. Therefore, the Company is actively seeking additional
sources of financing to continue operating and meet its objectives.


While the Company is actively seeking additional sources of financing to
continue operating and meet its objectives, there can be no assurance that such
financing will be available on terms acceptable to the Company. If for any
reason, the Company is unable to secure the additional sources of financing and
continue as a going concern, then this could result in adjustments to the
amounts and classifications of assets and liabilities in the Company's
consolidated financial statements and such adjustments could be material.


While the Company intends to secure additional sources of financing as soon as
possible, a continued delay in securing additional financing could ultimately
result in an event of default of the $250.0 million CIC convertible debenture,
which if not cured within applicable cure periods in accordance with the terms
of such debenture, may result in the principal amount owing and all accrued and
unpaid interest becoming immediately due and payable upon notice to the Company
by CIC.


About SouthGobi 

SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which
Turquoise Hill Resources Ltd. ("Turquoise Hill"), also publicly listed in
Toronto and New York, has a 56% shareholding. Turquoise Hill took management
control of SouthGobi in September 2012 and made changes to the board and senior
management. Rio Tinto has a majority shareholding in Turquoise Hill.


SouthGobi is focused on exploration and development of its metallurgical and
thermal coal deposits in Mongolia's South Gobi Region. It has a 100%
shareholding in SouthGobi Sands LLC, the Mongolian registered company that holds
the mining and exploration licenses in Mongolia and operates the flagship Ovoot
Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.


Forward-Looking Statements: This document includes forward-looking statements.
Forward-looking statements include, but are not limited to: the Company's
expectations of sufficient liquidity and capital resources to meets its ongoing
obligations and future contractual commitments, including the Company's ability
to secure additional funding; the possibility of the CIC convertible debenture
and all accrued and unpaid interest becoming immediately due; the continued
pressure on the coal prices in China, and the related impact on the Company's
margins and liquidity; the Company's expectation that its royalty per tonne
calculated under the new "flexible tariff" royalty regime will decrease compared
to the prior reference price royalty regime; and other statements that are not
historical facts. When used in this document, the words such as "plan",
"estimate", "expect", "intend", "may", and similar expressions are
forward-looking statements. Although SouthGobi believes that the expectations
reflected in these forward-looking statements are reasonable, such statements
involve risks and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements. Important
factors that could cause actual results to differ from these forward-looking
statements are disclosed under the heading "Risk Factors" in SouthGobi's
Management's Discussion and Analysis for the year ended December 31, 2013 which
is available at www.sedar.com.


FOR FURTHER INFORMATION PLEASE CONTACT: 
SouthGobi Resources Ltd. - Investor Relations
Galina Rogova
Office: [phone]
Email: [e-mail]


SouthGobi Resources Ltd. - Media Relations
Altanbagana Bayarsaikhan
Office: [phone]
Email: [e-mail]
Website: www.southgobi.com